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For those of us who remember a time when people only drank instant coffee at home, the London Coffee Festival on a sunny spring afternoon is a reminder of how far we have come. Held in a huge former industrial building off Brick Lane, east London, it is thronged with thousands of people — many of them local hipsters — who want to be at the cutting edge of UK caffeine.

One of the leaders in the country’s new coffee movement is Union Hand-Roasted Coffee, a business based a little further to the east of the city. At its stand, different brews are being served and festival-goers are being invited to identify “notes” such as citrus, spice and caramel. Many of the varieties of the coffee being roasted come with a back-story about their sustainable sourcing.

Steven Macatonia and co-founder Jeremy Torz started Union in 2001. Later that year they were travelling in Guatemala and, as coffee prices dipped to the lowest level in decades, they saw first-hand the effects on growers. “Coffee is traded as a commodity and you realise how dysfunctional the commodity market is if you’re relying on it to support your family,” Mr Macatonia says.

They decided to bypass the brokers and intermediaries and move to a business model where they dealt with producers directly and paid them a better, more stable price. The farmers would grow the quality product they wanted and which would be worth more.

“Union is direct trade and that allows us to be high-quality and ethical,” says Mr Macatonia. There are, he says, three factors in play. The first starts with the bean and concerns the quality of the coffee and relationship with the farmer. The second involves long-term commitment and investment in farms and communities. The third is working conditions on farms and labour standards.

Sometimes, the challenge is to raise the quality of what is already there. The company has a longstanding relationship with the Abahuzamugambi Ba Kawa co-operative in Rwanda. “Our project in Rwanda was aimed at improving the livelihoods of small farmers,” says Mr Macatonia.

When the project started in 2002, Rwandan coffee was only commodity grade and traded at poor prices. However, Union recognised that many of the farmers were growing Bourbon coffee plants — an arabica cultivar — which had the potential to produce high-quality, premium-grade coffee.

Working in conjunction with the development agency USAID, Union showed the farmers how to process their crop in order to end up with a better and more consistent product. “Even in the early stages at the end of the first year, we knew we had something special,” says Mr Macatonia.

Union launched its first Rwandan single origin coffee in 2002 “and now speciality roasters are clamouring for Rwandan coffee”, he says. “We started with 300 poor farmers in a ghost town and we now work with 5,000 farmers who have 20,000 family members. The town is a thriving community.”

Union also aims to improve working conditions. “Some farms might only have a dozen full-time workers. But in the picking season, they have 600 extra workers and need the facilities to accommodate them. So we’ve worked with growers to construct good-quality dormitories and toilets.”

This, Mr Macatonia says, creates a virtuous circle. Seasonal workers stay for longer — typically three months, rather than two weeks. They can be trained and the coffee is better and more valuable.

Much of what Union is undertaking can be applied to most coffee-growing areas. The global “bean belt” tends to be in tropical areas at altitude with decent rainfall.

“These places are beautiful but they often have a low human development index,” says Mr Macatonia, referring to a measure that combines life expectancy, education and per capita income indicators, “and they are vulnerable to climate change.” He adds: “The locals may be indigenous people who don’t speak the country’s main language and are actively discriminated against.”

Union has won a Queen’s Award for sustainable development, which is a welcome endorsement. UK consumers tend to look out for certification when it comes to ethical credentials.

You realise how dysfunctional the commodity market is if you’re relying on it to support your family

Steven Macatonia

While this is laudable, it can also be restrictive and involve too much box-ticking, Mr Macatonia argues. “We deal with producer groups ranging from six farmers to a co-op with 1,000 farmers. We want to be flexible,” he says.

“We don’t report to shareholders and the choices we make in business are not driven by absolute profitability,” he adds. “Sourcing ethically requires a huge amount of work and administration.” However, the sector is buoyant, and the coffee market in the UK is still expanding. Last year, Union turned over £11.5m, bought 500,000kg of coffee and grew by 20 per cent.

The company is also helping to secure the future of coffee itself. In conjunction with Kew Gardens, Union is working to preserve the Yayu Biosphere reserve in Ethiopia.

“This contains some of the last wild populations of arabica coffee plants and it’s very important as a source of genetic diversity,” says Mr Macatonia.

While Britain’s future relationship with the EU will not become clear for months, at least, the government will look to successful companies such as Queen’s Award winners to lead the way in raising the country’s efforts in trade and innovation